By Ramakrishna V Raut
Technology has aided businesses to unlock their potential and they have been leveraging it for revenue opportunities, reducing expenses, and speeding up processes. The financial sector in India has always embraced cutting-edge technologies, and as a result, it has been undergoing transformations. The emergence of FinTech companies in India has disrupted the financial sector and it is now amongst the fastest growing Fintech markets in the world. In India, there are currently over 2,000 DPIIT-recognized FinTech startups, and this number is rapidly increasing.
Some of the most cutting-edge, effective, and quick systems in the financial services industry today have emerged as a result of the development and integration of artificial intelligence and data science (DSAI). These technologies have impacted and enhanced operational capabilities for FinTech, bringing about a period of superior functioning supported by the expanding accessibility of high-quality data and information.
Technology is transforming FinTechs in India
Modern economies like India have been fuelled in large part by financial technology (FinTech) startups, which has become critical for its development. The next generation of FinTech, known as smart FinTech, is greatly influenced and aided by data science and artificial intelligence (DSAI) techniques. In order to drive intelligent, automated, and personalised economic and financial businesses, services, and systems, it is synthesising broad DSAI methodologies.
AI is facilitating creditworthiness.
Fintech players in the lending space have their own innovative methods of credit evaluation to tackle the challenge of an individual’s credit history. While there are myriad heuristic approaches that can be used for this purpose, AI turns out to be the most efficient in this aspect. When we talk about rural areas, where people have hardly any credit history, for smaller loan prospects, AI can leverage the power of data and create a credit score. The information can be procured from central government data, farming records, social networks, travel information, and other features using predictive modelling and ML algorithms.
Creating a better customer experience
As customer behaviour has changed over time, FinTech companies are under pressure to deliver unique experiences. CX, or customer experiences, have been becoming extremely dependent on the qualitative aspects delivered by the brand rather than only the products or services. In this regard, AI can be of assistance, as it can leverage the power of NRLP (natural regional language processing) in order to reach untapped areas. If we take the example of rural areas, where communication happens largely in the regional languages, AI can promote the content in those local dialects that are understood by them. Organisations can use internal and external customer data to compile thorough profiles of their clients, which they can then use to customise customer service and make highly individualised offers.
DS aiding in risk mitigation
For the purpose of preventing erroneous customer information as well as ensuring culpable lending, many modern FinTech startups in the lending sector are using a variety of alternative data points to understand consumer behaviour. These data points can be defined by lenders based on multiple other data sources as well, including geographical and demographic characteristics, income group, gender, employment status, organisation type, language, and many more. They can use data-driven assessments to monitor customer behaviour, which could detect fraudulent behaviour under an early warning system. Customers with financial issues will be detected sooner, and the problems can be addressed before the customer defaults.
Predictive analysis eases payment collections
Digitalization of payments has opened several avenues for businesses operating in the financial sector. However, it has also been challenging in terms of collections for FinTechs. A digitally enabled collection system in the lending industry requires optimised customer interactions. This can be made possible by utilising the functions provided by modern data science. Today, DS is assisting lenders in performing predictive analysis using data that is available to them from various sources. Additionally, it helps lenders comprehend how customers repay debt and the type of channel that will best suit them. This development in the FinTech industry has created a wide range of payment options and made it possible for lenders to connect with clients and ensure payment collection at a lower cost.
DSAI: A Gamechanger for FinTechs
DSAI is likely to become the foundational enabler of the new FinTech generation in India. It is redefining and reshaping the ideas, goals, materials, and tasks of these modern disruptors of the financial industry. It has the potential to change how contemporary economic and financial businesses function, conduct their business, engage with their stakeholders, and collaborate. In addition to enhancing the effectiveness, cost-effectiveness, CX, risk mitigation, regulation, and security of current financial systems, DSAI also develops novel, exceptional, more sophisticated, secure, and proactive products and services that constitute the new sector of smart FinTech. Digital lending is expected to be one of the traditional industries that has been significantly disrupted by the smart FinTech industry. The development of FinTech startups and the adoption of DSAI methodologies are facilitating instant loan solutions and improving credit disbursement procedures.
The author is head – data science and technology, Happy